Morning swings for the title St Microelectronics which, after a'opening in sharp decline, has arrived at earn over 2%, while in mid-morning it shows a decrease of 2,68% at 25,06 euros. The company has published the financial results of the third quarter of 2024, a period that closed with a contraction in revenues and margins. In presenting the data, CEO Jean-Marc Chery said that the new global program to redesign the manufacturing base will help to increase revenues. Stm's top management expects a decline in revenues between the 4th quarter of 2024 and the 1st quarter of 2025 well above normal seasonality.
Revenues down 26,6% as expected
At the end of the quarter the revenues amounted to 3,25 billion dollars (in line with management expectations), down 26,6% compared to the 4,43 billion achieved in the same period of the previous year, following the net sales decline to OEM (original equipment manufacturer) and Distribution. On a sequential basis (i.e. compared to the period April-June 2023) turnover increased by 0,6%. The gross margin has attested to 37,8%, a value that compares with 47,6% in the third quarter of 2023 and 40,1% in the second quarter of the year, mainly due to the product mix and, to a lesser extent, the selling price and higher costs from underutilization of production capacity. STM's top management estimated a margin in the order of 38%. Stm ended the third quarter of 3 with a Net income of 351 million dollars, compared to 1,09 billion recorded in the same period last year (-67,8%).
I Net revenues StMicroelectronics' third-quarter results “were in line with the midpoint of our business guidance,” said the company's chief executive officer. Stm, Jean-Marc Chery, commenting on the results. “Revenues were above our expectations in the Personal Electronics, reported a more contained decline in the sector Industrial and they were inferior in the Automotive. Third quarter gross margin of 37,8% was broadly in line with the midpoint of our business guidance.” Net revenues of first nine months decreased 23,5% year-over-year across all reportable segments, particularly in the Microcontrollers segment, which was impacted by ongoing weakness in the Industrial market. Operating margin was 13,1% and net income was $1,22 billion,' Chery said.
New program will help grow revenue
The group's number one announced "a new global program to redesign the manufacturing base by accelerating our production capacity to 300mm for silicon (Agrate and Crolles), to 200mm for silicon carbide (Catania), and reducing overall costs. This program should have the effect of strengthening our ability to grow revenue with a'improved production efficiency, having a cost reduction on an annual basis at the end of 2027 estimated, in millions of dollars, in the upper range of a three-digit range”.
Since the beginning of 2024, the Company has made significant changes to its structure and way of operating, including the reorganization of the Product Groups. Effective October 1, 2024, Lorenzo Grandi, President and CFO, has assumed additional responsibilities, with a scope that now also includes Supply Chain, Corporate Development and Integrated External Communication in addition to Finance, Global Procurement, Digital Transformation and Information Technology, Enterprise Risk Management and Resilience. The Executive Committee of STM remains unchanged and continues to report to Jean-Marc Chery,
President & CEO of Stm.
At the end of September 2024 the financial position The company's net cash was positive for $3,18 billion, compared to $3,16 billion at the beginning of the year. At the same date, Stm had liquidity of $6,3 billion. At the end of September, shareholders' equity amounted to $17,8 billion. The company's operating activities generated a cash flow of 723 million dollars, while investments amounted to 601 million.
Next two quarters: revenue decline above normal seasonality
For current quarter Stm's top management expects a turnover in the order of 3,32 billion euros, corresponding to a 22,4% drop year on year and a growth of 2.2% compared to the previous quarter. marginality should be placed in thearound 38%, with an impact of approximately 400 basis points due to the costs of underutilization of production capacity. Stm specified that this forecast is based on an assumed effective euro/dollar exchange rate of approximately 1,11 for the 4th quarter of 2024 and includes the impact of existing hedging contracts.
the whole of 2024 Management expects net revenues of $13,27 billion, a year-over-year decline of 23,2%, in the lower band of the range indicated in the previous quarter. The marginality is estimated to be just under 40%. Furthermore, based on the current order book and demand visibility, the top management of Stm foresees a Revenue decline between Q4 2024 and Q1 2025 well above normal seasonality.
